Reasonable Causes for IRS Penalty Abatement

Abatement of Penalties & Interest with The Law Offices of Nick Nemeth

Contrary to common belief, an IRS penalty is not a problem that you cannot overcome. The IRS, in certain scenarios, may withdraw a penalty if the defendant is able to prove that they cannot pay their tax liabilities due any of the reasonable causes prequalified by the federal body. To decide whether a cause is “reasonable” for penalty abatement, the IRS usually takes into account four factors; the reason(s), tax payment compliance history, time taken by the defendant to become compliant, and the circumstances given for late filing or nonpayment of taxes. In this blog post, we discuss three scenarios the IRS considers “reasonable causes” for IRS penalty abatement.

1.Death or Serious Illness

The IRS considers a serious medical condition, illness, or death in the family to be a reasonable cause for penalty abatement. When it comes to dealing with an IRS penalty, this cause is “reasonable” for both individual and corporate taxpayers, as well as their family members. It is, however, important to have the documentation to support the cause. When filing an abatement request, the applicant must include any evidence that may elaborate the significance of the situation. If a loved one has been unwell, due to which you could not file or pay taxes, you also need to give details of your relationship with the person.

2.Unavailability of Records

Although the inability to keep records showcases a lack of responsibility, a taxpayer may qualify for abatement of penalties and interest if they were unable to find the documents necessary to honor their tax commitments. The IRS, however, also looks at the reasonability of the failure of maintaining tax records and whether the mentioned records were under the taxpayers control. Tax filing has to be accurate, and therefore, unavailability of records is another reasonable cause the IRS may consider to abate a tax penalty.

3.Miscellaneous Reasons

There are a number of other reasons that the IRS may consider to abate tax penalties,  the IRS just has to regard it as a reasonable cause. A few such reasons include ignorance of the law, natural disasters, and wrong advice from a tax advisor or the IRS. If you commit an error while filing or paying taxes, the IRS may consider it as a reasonable cause and choose to abate the tax penalties and interests under your name. It is important to note that lack of funds is not a reasonable cause considered by the IRS, but the reason behind your financial situation may meet the criteria of a reasonable cause.

Wrap Up

In an unmanageable situation where you cannot pay or file their taxes in time, the IRS will help you out. However, abatement of penalties and interests is only considered by the IRS if the reasons given by a taxpayer has detailed documentation and evidence to prove their situation. If you need legal guidance, look no further than The Law Offices of Nick Nemeth. For over 18 years, our team of IRS lawyers and tax professionals has been committed to helping individuals overcome all sorts of IRS tax-related issues, like IRS penalties. To schedule a no-obligation consultation, write to us at or fill our contact form. Alternatively, simply call (972) 426-2553.